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Migration, Illegality, and the EUhttps://co-de.info/2017/01/30/migration-illegality-and-the-eu/
https://co-de.info/2017/01/30/migration-illegality-and-the-eu/#respondMon, 30 Jan 2017 15:59:13 +0000http://co-de.info/?p=370]]>The contemporary European Union (EU) migration policy-making is based on a limited understanding of mechanisms of migration. The outcomes of this setting are amplified by the terms which are employed in migration policy-making. According to the latest statistics, 1.9 million people migrated into the EU from non-EU countries in 2014. The European Commission presents that 276,113 out of the 1.9 million migrants from non-member states were so-called irregular migrants, and an estimated 220,000 of them arrived by crossing the Mediterranean Sea. The number of irregular migrants and migration across the Mediterranean increased by 138% and 310% respectively compared to statistics from 2013. The European Commission employs these statistics as a call for action for increased border surveillance and stricter migration policies as the large percentage numbers, exceeding 100, are presented in the contexts of illegality and irregularity.

This essay discusses and analyses the European response to clandestine migration into the EU. Instead of focusing on one country’s sovereign policy making, the response is analysed on EU level. This essay presents EU policies and opinions and analyses them with tools from academic research on clandestine migration.

How the problem is created and the responses to it forced

Irregular migration as a term has replaced illegal migration in most academic and political discussions after a conclusion was reached that no human being can be judicially illegal [1]. Yet the word irregular contains and carries on the essence of the word illegal: an irregular person acts in violation of regulations and differs from the norm. This irregularity poses a threat if the migration has its starting point outside of the territory territory which constitutes the regular. As Shahram Khosravi notes, the people who differ from the norm are perceived as unclean and poor, but simultaneously they pose a risk to the existing political order and threaten to contaminate the (social) soil of the destination country as they evade any existing social categories and therefore our understanding of them. ‘Irregular migrant’ is therefore assigned a strongly negative connotation. In the EU context, the term also encapsulates both smuggled migrants and the victims of cross-border human trafficking; a judicially and analytically problematic juxtaposition with which entry can be denied. Ruben Andersson favours the term clandestine migration to describe human migration which eludes or attempts to elude state sanctioned control of migration. This term encapsulates therefore the smuggling and trafficking of migrants, and all other entry into a territory by irregular means. The term ‘clandestine’ is relatively neutral yet very analytical, and it is therefore preferable over other options.

Clandestine, irregular, and illegal migration all refer to the unwanted: the unwanted results of unwanted migration. Yet, in the EU context, it remains unclear what the concrete unwanted results might be. In March 2000, the European Commission reviewed the Amsterdam Treaty which aims to develop the EU into an area of security, freedom, and justice, and concluded that clandestine migration falls under the Amsterdam Treaty. The treaty also concluded that its consequences mostly relate to economic exploitation of the migrants, labour exploitation, and to the existence of criminal networks within the EU. The consequences of clandestine migration have later been elaborated to include risks and dangers the migrants are vulnerable to: violence by the smugglers and traffickers during their journey, and the risk of drowning. The public frequently expresses concerns about the smuggled migrants’ possible connections to terrorism. However, Frontex, the EU agency responsible for European border management, concluded in their 2015 Annual Risk Analysis that “Frontex is not in a position to identify, nor does it have any information that suggests, any nexus between terrorist travel and irregular migration routings and/or facilitation networks.” The same report speculates on the possibility that EU-based fighters might adjust their modi operandi as EU migration policies change, and states that foreign radicalised fighters may pose a future challenge for border agencies. The OECD reports that terrorist networks have turned to clandestine migration operations in order raise funds for their activities, and that terrorists have been smuggled into the EU among other migrants, but lack sources for the latter statement. The illegality aspect of clandestine migration and criminal networks are emphasised in most reports and opinions by and for the organs of the EU [2].

Illegality of clandestine migration and the risks involved in it to the migrant are outlandish arguments for EU policy making. They are used to describe border-drawing in geographic areas, and between the people with an entitlement to a territory and those risking to contaminate it. They also reflect the unanticipated consequence of globalisation having freed the movement of capital and goods while the movement of people remains controlled by states and supranational institutions. The latter point becomes visible in the EU’s action and policy plans which aim to ease the migration of highly skilled labour force through an improved Blue Card Directive on the one hand, and to deploying returned clandestine migrants as a deterrent on the other. Paradoxically, the means taken by the EU to curb the numbers of clandestine migrants into its territory has led to an increase in clandestine migration. This paradox can be understood through Andersson’s “illegality industry”: as clandestine migration is understood as illegal, means must be taken by others to successfully transport people without being caught, and by others to prevent this. This facilitates an arms race on both sides and creates sources of income in forms of official and unofficial jobs.

The problem of treating all clandestine migration as the same

The EU perceives clandestine migration as “a complex crime” which “has increased exponentially over the past year” and has therefore made “the fight against migrant smuggling [a] priority”. Drafting policies requires reflection on responses to the issue, and the context of complex crime assigned to clandestine migration in the quotes contains problems which relate both to the understanding of the ‘crime’, and responses to it later. I will now discuss three such problems.

The first problem is that EU migration policy does not differentiate enough between the different migration-related irregularities. Hein de Haas argues two points about the misconceptions in the EU migration legislation: first, that the separation between legal entry and visa overstay which constitutes the majority of the irregularities of migration is not appreciated enough, and second, that both migrant smuggling and trafficking in persons are categorised and therefore addressed in the same way. The EC announces that “ruthless criminal networks organise the journeys” and that these organisations “often expose migrants to life-threatening risks and violence”. The framing of migrant smuggling as a violent act committed by ruthless criminals reduces the complex act to a despicable crime. It arms the policy makers with powerful tools and sanctions them to act against ‘the crime’ because it is clear that violence and life-threatening dangers should be avoided and exposing people to them is ruthless. However, people voluntarily turn to smugglers for various reasons, to gain entry and to gain exit. The sizes and levels of organisation of smuggling networks are likely elaborated, and involve peoples living near border areas who sometimes are involved in assisting migrants to cross as a source of extra income, and while the conditions under which people are smuggled might be inhumane it is not in the interests of the smugglers to use violence or act ruthlessly towards the clients in the extent that is believed in Europe. Human trafficking, on the other hand, involves coercion, extortion, or violence by the recruiters or traffickers towards the trafficked persons. Trafficking in persons exploits people’s vulnerabilities to expose them to exploitation, and aims to stop the trafficked from escaping. In a stark contrast with migrant smuggling, human traffickers look for long-term profits from their victims and do not necessarily expect payments from their victims, while smugglers want payments from their clients and have it in their interest to transfer the clients quickly. Furthermore, human trafficking does not necessarily have to be transnational, while migrant smuggling always involves crossing national borders.

This leads us to the second problem which is the transferring of risks of clandestine migration to the migrants. By being aware of the dangers related to crossing the Mediterranean Sea with often unsuitable vessels, yet making safe means of migrating into the EU exclusive to few educated persons, the EU and its border managing organisations can claim that urgently needed options of safe passage (e.g. by obtaining a visa and travelling by airplane) into the EU are offered but not used. The blame is also placed on the migrants with an irregular status already residing in the EU by warning about the risks of possible labour exploitation. Undocumented people and migrants with an irregular status seek work in the gray economy as it is often the only opportunity. Workers in the grey economy are, of course, not protected and are vulnerable to exploitation – yet this risk has to be taken as it is the only option. This way the destination countries can steer attention away from the responsibilities of improving working conditions and monitoring employers. While this is in fact addressed as a side issue, the focus is on the prevention of arrival of clandestine migrants who are blamed for increasing the amount of illegal practices in the labour market.

The third problem is in the prevention measures taken by the EU against clandestine migration, and how it fails to recognise the position of the undocumented migrants already residing in the EU. The EU Action Plan Against Migrant Smuggling aims to “counter and prevent migrant smuggling”, “address the root causes of irregular migration”, and bring to justice and seize the assets of smugglers. Also the EU Strategy Towards the Eradication of Trafficking in Human Beings states as its priorities, among others, the prevention of human trafficking, increased identification of victims of human trafficking, and the increased prosecution of traffickers. Most undocumented migration is labour migration, and most undocumented migrants increase the labour force for industries where they are needed. The EU treats an existing informal industry as a possible pull-factor for clandestine migration, and responds to this in two ways. First, undocumented migrants are made a target for inspections and monitoring in the formal and informal industries. Second, fast prosecutions and deportations are used alongside information campaigns in the countries of origin to discourage clandestine migration to Europe. This is problematic because it strengthens the inequality principle which allows only a small number of high-skilled migrants to enter. Furthermore, although the victims of human trafficking are protected from deportation in the law and are entitled to residence permit, health care, and protection if they agree to cooperate with the law enforcement in the destination country to bring their traffickers to justice, they are still vulnerable to deportation and further exploitation as they may not be aware of their rights and may be too afraid or unable to cooperate.

The prevention measures and deportation measures are designed to be implemented in international and intercontinental scales to reach individuals planning to migrate before they begin their journey. The EU Action Plan Against Migrant Smuggling presents a plan to employ social media and existing migrant diaspora in Europe to develop and spread a counter-narrative to the benefits of migrant smuggling (and effectively migration) to Europe. The intercontinental aspect of migration prevention is emphasised in the negotiations between the EU, transit countries, and countries of origin with an aim to “convince third countries to take back their nationals that are irregularly present in Europe, which is an international obligation”.

Picking and choosing words and people

Contemporary EU migration and border policies in Ruben Andersson’s terms reflect a strong urge to shut out the unwanted. Justification for the actions to pick-and-choose the ones who may enter and to deny entry from the others is gained through a careful choice of words, which are employed to describe an unwanted phenomenon and unwanted people. Academic literature on the scale, motives, and results of undocumented migration are in a stark contrast with the scale of EU’s actions against it. Strong sentiments about the contamination of the existing society are translated into a judicial language which frames the migrants as possible risks and illegal, the people who migrants meet along their journey as organised and ruthless criminals, and a certain type of migration as a phenomenon which is illegal, breeds illegality in the destination, and requires urgent counter-measures. Failing to perceive the dynamics of the different parts of the illegality industry results in misguided responses by the EU which steer the attention away from the European labour market’s needs for more workers and a need for further improvements in the European naturalisation policies. The current policies furthermore disregard the motivations people have to migrate and the reasons why people rely on clandestine means of migrating.

~Otso Rajala

Notes

[1] I deemed it important to include this obvious statement in the essay because even in late 2016 and early 2017 quite straightforward terms are still mixed in the Nordic and North-American media and political rhetoric. For academic discussions on the topic, see this and de Genova, N.P. (2002). Migrant “Illegality” and Deportability in Everyday Life. Annual Review of Anthropology.

]]>https://co-de.info/2017/01/30/migration-illegality-and-the-eu/feed/0complexdevelopmentsblogBook Discussion I: The Hidden Wealth Of Nations by Gabriel Zucmanhttps://co-de.info/2016/10/06/book-discussion-i-the-hidden-wealth-of-nations-by-gabriel-zucman/
https://co-de.info/2016/10/06/book-discussion-i-the-hidden-wealth-of-nations-by-gabriel-zucman/#respondThu, 06 Oct 2016 22:43:38 +0000http://co-de.info/?p=170]]>LuxLeaks, Panama Papers and more recently BahamasLeaks: Tax evasion is increasingly recognised as a major problem for government revenue collection. This issue is not only about wealthy individuals who hide their assets from tax authorities, as has been shown in the recent EU versus Apple controversy involving the US company’s stateless subsidiary. Gabriel Zucman is the go-to expert on such schemes and how to fight them. This article discusses and summarises his 2015 book The Hidden Wealth Of Nations.

Introducing Gabriel Zucman

Zucman is a young but already quite established economist, teaching at the University of California at Berkeley. Having Thomas Piketty, author of 2013’s hot book Capital in the 21st Century, as PhD supervisor clearly influenced his research and continues to shape his career. Together with Anthony Atkinson, Facundo Alvaredo and Emmanuel Saez, they have founded the World Wealth and Income Database, helping researchers track shares of top income recipients and wealth holders in multiple countries. This group of renowned scholars consists of great contributors to the revitalised academic interest in growing inequalities, alongside other thinkers such as former World Bank economist Branko Milanovic.

As demonstrated in The Hidden Wealth Of Nations, Zucman has found his own research niche: global taxation. Rather than working out and refining the most macro of economic theories such as Piketty with his homage to Marx, Zucman’s clear focus is more than a play on words aluding to Smith’s The Wealth Of Nations. Although Zucman has a firm grip on historical developments, he goes beyond telling a story and weaving theoretical carpets. In his attempt to build a comprehensive database on top wealth holders, he has identified a lack of data: the missing wealth, or as in the more accusatory form, the hidden wealth of nations. [1] In the book discussed here, he details his findings about these assets, how large their number is, who is hiding them, what are the mechanisms of hiding them, and what can be done about this.

Hidden Household Wealth

For years, economists have puzzled over a mystery in obscure economic data: financial liabilities around the world consistently outstrip the reported financial assets held by investors –- by trillions of dollars.

Sifting through central bank data from various countries, Zucman seemed to find the answer. Those trillions were missing because they were showing up as shares of mutual funds incorporated in tax havens, primarily in Luxembourg, Grand Cayman and Ireland. His theory: wealthy investors around the world have used the investments, often made through Swiss bank accounts, to hide their wealth.

The idea is that in the case of a German citizen holding shares from a US company through a Swiss bank account, only the liabilities on the balance sheet of the US will be reported, while assets go entirely undeclared: Switzerland does not register assets as these are only administered there; however, nor will Germany do so as long as Switzerland does not report the assets held by the Swiss bank as ultimately German property (see Zucman, 2015: p.37; all page references from here on will refer to this book).

The ingredients of this tax evasion scheme regularly include the following three denominators:

A shell company registered in a secrecy jurisdiction that is set up quickly, costs little and is run anonymously.

The shell company’s bank account, opened in a country that does not report to tax authorities of foreign countries.

The hidden wealth is finally invested in mutual funds in low-tax countries, allowing for the assets to accumulate further capital gains.

How many assets are hidden in this way globally? Through rigorous analysis of national balance sheets, Zucman reaches the conservative estimate of assets worth $7.6 trillion stashed away in tax havens. “There has, in fact, never been as much wealth in tax havens as today. On a global scale, 8% of the financial wealth of households is held in tax havens” (p.3).

Extrapolating from Swiss data on how high the rate of voluntary declaration of assets is, he estimates that “$6.1 trillion were not declared globally in 2014” (p.49). This amounts to annual losses of about $200 billion in tax revenues – “the equivalent of about 1% of the total revenues raised by governments worldwide” (p.52). The calculation takes into account capital income tax, inheritance taxes and the rare wealth taxes. One should note however that such numbers are based on tax rates of today which are relatively low compared to average post-war rates.

What proposals does Zucman have up his sleeve for recovering this lost revenue? He puts much hope into a recent US legislation called Foreign Account Tax Compliance Act (FATCA) and similar systems that require automatic exchange of information. This is in contrast with current on-demand exchange of information which he criticises as follows: “To obtain banking information from a tax haven, a country (…) must first have well-­founded suspicions of fraud against one of its residents, which in practice is almost impossible to prove” (p.59). In order to ensure the cooperation of countries, Zucman recommends tariffs imposed on non-compliant tax havens as these are heavily reliant on exports. This could already be accomplished, he argues, by a relatively small group of countries.

In his proposal, automatic exchange of information is complemented by a world financial register to enforce the cooperation of banks that have historically gone to great lengths in guarding the secrecy of their clients’ hidden assets. This register would keep track of global financial wealth, similar to national registers of land ownership. Central securities depositories, entities that hold assets to facilitate their exchange by the actual owners, would feed their information on the ownership of global securities into the register. Tax authorities could then gather information on their citizens’ financial assets from that central entity without having to rely on full declarations.

While technically ambitious, such a register does seem feasible if its creation were supported by the world’s major powerhouses. One practical argument Zucman does not address is however the question of world leaders’ actual interest in tax collection without exceptions. As revealed by the recent leaks from Luxembourg, Panama and the Bahamas, exactly these leaders, or persons close to them, are often complicit in the business of tax dodging. A strong citizens’ movement pushing for change in that direction seems like a necessary requirement to press for real political change in global taxation. [2] Although organisations like the Tax Justice Network are recurrently making it to the head lines, we are less optimistic than Zucman who estimates that “automatic sharing of bank information is set to become the global standard by the end of this decade” (p.64). While an eventual agreement seems likely, one may well remain doubtful as to whether there will be any loopholes left in the legislation.

Corporate tax avoidance

In the last chapter Zucman also takes up the recently ubiquitous topic of corporate tax evasion. He describes that “the corporate tax is not adapted anymore to today’s globalized world and must be reinvented” (p.102). The problem posed by corporations becoming multi-national is the pressure on national governments to offer companies incentives for being taxed within their national tax regimen. Companies can thus make use of a race to the bottom by governments competing for the lowest corporate tax rates. (This issue is at the core of Ireland’s refusal to accept the financial penalties the EU imposed on Apple.)

Unlike his more original recommendations to solve the issue of hidden household wealth, he is proposing to scale up a system already in place on a regional level; for example, to allocate corporate profits fairly among US states. Such a scheme goes under the name of unitary taxation and has been discussed since the inception of the current system of separate taxation that practically allows multi-national corporations to shift their profits to low-tax legislations as they please [3]. The idea is that profits are taxed globally, regardless of where subsidiary companies are located, in the following way (pp.110-111):

To attribute profits to the different countries necessitates the use of an apportionment formula, perhaps some combination of sales, capital, and employment … [so that] the location of profits cannot be manipulated. One way to achieve this is to attribute a substantial weight to the amount of sales made in each country, because companies have no control over that: they cannot move their customers from the United States to Bermuda!

Our Verdict

Are the numbers to be trusted? In our opinion, Zucman appears to be reasonable in his calculations, so that reviews critical of his findings have to misrepresent his approach in order to find attack surface. One clear example of such misguided critique is Sternberg’s writ in the Wall Street Journal which states:

Mr. Zucman’s guesses about billions of tax dollars left uncollected boil down to crude extrapolations: Assume all foreigners’ money on deposit in tax-haven jurisdictions has gone completely untaxed by the relevant authorities …

This is factually wrong. Either Sternberg wants to reassure his ideologically offended readers or he has not actually read the book. On pages 47-49 Zucman clearly states his procedure:

Of course, not all the wealth held offshore evades taxes: some taxpayers duly declare their Swiss or Cayman holdings. But contrary to what Swiss bankers sometimes claim, most offshore accounts are still to this day not declared to tax authorities … Now, according to the latest figures published by the Swiss tax authority, only 20% of the assets are voluntarily declared—­for the rest, the depositors refuse to reveal their identity … On the assumption of a like basis for other tax havens, this means that $6.1 trillion were not declared globally in 2014.

There you have it–positive reviews could never assure you better of the factual correctness if critics must apply such dubious methods to reject the conclusions presented. What remains to be noticed is Zucman’s clear writing style and the good structure in which he incorporates his arguments. The book is easily readable even for newcomers to the topic of taxation and requires only a basic understanding of financial globalisation. We thoroughly enjoyed the book and can recommend it as an introductory reading to one of the more apparent solutions to rising global inequalities–functional global taxation, for individuals and corporations.

[2] For a list of organisations fighting the fight for global taxation and tax justice you may look at Open Data For Tax Justice, of which Gabriel Zucman is an individual member.

[3] This report written by Sol Piccotto for the Tax Justice Network gives you the details on unitary taxation and the reasons why there needs to be a new approach to corporate taxation in the first place.

References

Zucman, G., (2015). The Hidden Wealth Of Nations: The scourge of tax havens. University of Chicago Press.

]]>https://co-de.info/2016/10/06/book-discussion-i-the-hidden-wealth-of-nations-by-gabriel-zucman/feed/0complexdevelopmentsblogPhilanthrocapitalism and the Gospel of Wealthhttps://co-de.info/2016/03/15/philanthrocapitalism-and-the-gospel-of-wealth/
https://co-de.info/2016/03/15/philanthrocapitalism-and-the-gospel-of-wealth/#respondTue, 15 Mar 2016 11:20:05 +0000http://co-de.info/?p=18]]>The Gospel of Wealth is an article that has been applauded by modern philanthropic figureheads such as Bill Gates and Warren Buffett, and continues to draw attention despite being more than a century old. [1] Written in 1889, the article is one of the reasons why Andrew Carnegie is remembered by certain ‘higher circles’ as a role model for the thoughtful, even ethical member of the economic elite; his aggressive business tactics, to put it mildly, simply brushed aside. In this article we will explore the extent to which members of the surging philanthrocapitalist movement in the United States can be seen as the successors of Carnegie’s thought, and identify some of the commonalities and differences. The last part is devoted to a discussion on symbolic structures and the role of large-scale philanthropy in maintaining them.

Robber Barons and The Gospel of Wealth

The late 19th century saw a wave of extreme inequality, especially and firstly in the US. The reason is commonly ascribed to technical advancements such as railroads. With various governmental subsidies, the extension of the railroad system to connect remote areas within the still sparsely inhabited United States became a very profitable business; other branches such as the steel industry vital to the production of rails, or fuel producers similarly created fortunes for their owners and investors. In the rough political and economic climate of those days, open corruption and, from today’s view, downright cruel business practices led to increasingly monopolised markets, dominated by the people oft-referred to as ‘robber barons’: people such as Carnegie, Rockefeller or Mellon.

Carnegie, himself from a working class family, had developed an inclination for philanthropy already early in his life. Based on his discipleship of the original propagator of Social Darwinism, Herbert Spencer, Carnegie developed a theoretical legitimisation of the severe socio-economic inequalities that characterise the so calledGilded Age(1870-1900). It is worthwhile quoting him at length, if only to display his superior rhetorical qualities; he concludes in his ‘Gospel of Wealth’ (1889):

Thus is the problem of Rich and Poor to be solved. The laws of accumulation will be left free; the laws of distribution free. Individualism will continue, but the millionaire will be but a trustee for the poor; intrusted for a season with a great part of the increased wealth of the community, but administering it for the community far better than it could or would have done for itself. The best minds will thus have reached a stage in the development of the race in which it is clearly seen that there is no mode of disposing of surplus wealth creditable to thoughtful and earnest men into whose hands it flows save by using it year by year for the general good.

In his theory, society as a whole stands to profit from rampant inequalities: In an individualistic economic system, the most capable individuals will accumulate (or create) the wealth they then have the power to put to work. However, only if they use it for the better of broad parts of society, such a system can be sustainable and untouched by social upheaval. If such a scenario materialises, the ‘surplus wealth’ of these successful entrepreneurs who themselves are to live modestly will be used in the most effective way than if it were to be administered collectively. Carnegie thus envisions an aristocratic utopia, in the etymological meaning of the word as the ‘rule of the most capable’.

There are several aspects to critically examine here; the most obvious flaw in my view concerns the question whether a person successful in business necessarily has the knowledge and social understanding to create a functional, and simply happy civil society as well. Taking the business practices of the robber barons as a hint, it seems save to assume that this relation is very shaky indeed. [2] This article is however not devoted to Carnegie’s theory of the state (after all he is not remembered as a great philosopher), but to examining how he succeeded in making philanthropy the number one trait of the capitalist-turned-conscientious even in the 21st century. So, let’s move on.

The Profits of Philanthropy

It is interesting how explicit Carnegie often was about the personal benefits to be accumulated through philanthropy; indeed, Harvey et al. (2011) find that the philanthropic engagement of Carnegie yielded returns in all the forms of capital that Bourdieu originally introduced to sociological studies: economic, cultural, social and symbolic. These gains could be, and were, reinvested into his business activities, calling into question the notion that modern philanthrocapitalists are the first to merge business and philanthropy; or, from another angle, allowing for the question whether there is an element of altruism in these ‘high-level’ charity engagements at all.

Some aspects of this virtuous circle, of philanthropy and business are particularly interesting in a comparison of the robber barons and modern day giving practices. Easy access to political leaders is something which seems to come along with economic capital to begin with, at least in our times. As people have more money to give away, they are more likely to invest into political campaigns and be in contact with politicians (interestingly, both their direct representatives and others). [3] This might help to explain the general representative gap between popular opinions and political action in the US, where political reality was found to be responsive almost exclusively to elite policy preferences. [4]

As Harvey et al. however note, it was the scale of giving which set Carnegie apart from other businessmen, even in the eyes of fellow members of the power elite: “Few entrepreneurs have enjoyed the opportunity to lecture elevated political leaders on pressing topics – for example, Gladstone on political organisation, McKinley on imperialism, and Roosevelt on international peace – as Carnegie did” (Harvey et al., 2011, p. 441). This edge over his peers allowed him to outperform competitors on a nation-wide scale and construct a business empire, all the while fine-tuning the economic system towards his benefit. The common example for this is his campaign for the protection of the US steel industry, he was dominating at the time.

This opens another area for the use of philanthropy in capital reproduction: media. While Carnegie knew how to use them to polish his image in spite of the bloody clashes over the Homestead Strike at one of his steel works, modern representatives of philanthropy certainly take this a step further. Initiatives such as the ‘Giving Pledge’ with its trail of media attention and whole websites set up to celebrate it have no counterpart in history. While Carnegie did convince others to join him in his philanthropic practice – most famously his old competitor John D. Rockefeller – this pursuit of his was not organised in such a (mass) media-friendly way. The phenomenal claims that Edwards (2008, p. 32) finds to be one characteristic of philanthrocapitalism certainly contribute to this difference in scale between Carnegie and the contemporary philanthropists. (One example would be google.org‘s assurance that they “invest in teams with bold ideas that create lasting global impact”. If that’s all…) The profits to be reaped here are obvious: companies are able to whitewash their social impact, and the deeds of Bill Gates are eternally connected to Microsoft; what is good for (the image of) Bill Gates is good for Microsoft and vice versa, as he still owns shares [5]; after all, Gates has not become poorer over the last years, despite his philanthropy.

Going Global

Despite his fame, Carnegie’s influence never reached far beyond the trans-atlantic US-UK nexus, both business-wise and in terms of his philanthropic efforts. While he was engaged in the governmental part of politics and tried to use his influence “to bring ‘Peace on earth, among men Good-Will'” – the last sentence in the Wealth essay – Harvey et al. conclude that “[l]ittle of real substance came of Carnegie’s efforts” in that respect. In the global arena, modern philanthropy has had much more success than Carnegie, albeit in different areas: global peace, and other politically difficult engagements are shunned. This development can be seen critical or positive, but my point is something else.

Working with education in the US, globally it is their work on health that Bill and Melinda Gates (and less so Warren Buffett, although he is just as much a part of it of course) are famous for, having “spent over $15.3 billion on global health programmes to date, and the money has done considerable good.” (This line is from the actually very critical book on the Gates Foundation by Linsey McGoey, 2015, Chapter 5, ‘Gates Goes Global’.) Especially the vow to eradicate polio from the face of the earth and initial successes towards that goal have resonated greatly in media, and are certainly to be subsumed under the ‘considerable good’ that McGoey admits. The change of focus towards global issues is indeed remarkable: from the four divisions of the Gates Foundation, two are directly related to international development, one is for policy analysis and advice both in the US and anywhere else, and only one is devoted to the US entirely.

While we can see similarities between the patterns of engagement between modern philanthrocapitalists and Carnegie, to me this divergence of ‘spacial focus’ seems to be the greatest disconnect between them. Their family background seems unlikely to be able to account for that: Bill and Melinda Gates, as well as Warren Buffett are born and raised in the US, while Carnegie just migrated there at the age of twelve and thus had strong foreign ties. Perhaps this divide is driven by their different business backgrounds. After all, Carnegie mainly operated in the US. Microsoft, Berkshire Hathaway and of course Google are global to the core. Sure, the Gateses and Buffett have their special focus on the US as well, so that we can merely speak of a gradual change. After all, they are doing very similar things there compared to Carnegie and company. Nonetheless, the way they choose to present themselves, and also the location of their successes are widely more global than those of their, I think it is safe to assert now, predecessors among the robber barons.

The Philanthropic Motive

Reading The Gospel of Wealth suggests that there is an element of what Harvey and colleagues call proclivity to world-making, but what could be the simple desire to be admired, even post mortem:

[…] yet the man who dies leaving behind many millions of available wealth, which was his to administer during life, will pass away “unwept, unhonored, and unsung”, no matter to what uses he leaves the dross which he cannot take with him. Of such as these the public verdict will then be: “The man who dies thus rich dies disgraced.”

The Gates Foundation is conspicuously opaque on why they are engaging in philanthropy. They extensively inform about who, what, how and where the foundation operates; but the question about motives is formulated only in technical, teleological terms, any deeper philosophy or emotional motivation seemingly absent: “We believe by doing these things—focusing on a few big goals and working with our partners on innovative solutions—we can help every person get the chance to live a healthy, productive life”, is the closest I managed to find concerning the why-question on their web page. As royal scribes Bishop and Green note in their chapter called Carnegie’s Children (2010, Paragraph 1): “Long before Warren Buffett gave his money to Bill Gates, he gave Gates a copy of Carnegie’s text, and so helped inspire him to become a philanthropist.” We can thus only assume similar motives.

Surely, this notion of public image and being remembered is a not a fault of character. It might seem infuriating that people who regularly act(ed) against public interest, and are arguably responsible for much suffering, want to whitewash their image by spending on what they arbitrarily define as public good; nonetheless, doing what one finds to be beneficial for society is the basis of fruitful social organisation. I want to be clear on this: philanthropy must be critically examined for its efficacy and broader ramifications, just as other practices seemingly untouchable such as foreign aid. The money could alternatively be channeled via some public institution; philanthropy might even have to be curtailed, denying the power of wealth to transform into political power altogether. Condemning the individual which wants be recognised for, maybe naively, helping others without any consciously hidden intentions or put-aside knowledge, is criticising people for being good people. I am yet to see how this could get us anywhere better…

Society, Philanthropy and Symbolic Violence

On a final note: what does this article try to do? – Coming back to Bourdieu, he talks a lot about symbolic violence. What he means by that is a system of symbolic structures which assigns to people ‘their place in society’ and that everybody internalises as they grow up. Let’s assume your mother’s male boss always wore suits, while your family struggled to make ends meet and couldn’t afford fancy clothes. According to Bourdieu, chances are that you will be shaped by these relations, misrecognising men with suits as naturally authoritative instead of protesting the arbitrariness which keeps you, who can only afford cheap pullovers (and might happen to be female), from the capital accumulation that comes so easily to people who grew up under the ‘right’ circumstances. [6]

Philanthropy helps maintain these structures by making it seem legitimate that economic elites have the power to decide what the produce of society will be used for – aren’t they doing good with ‘their money’ after all? – Well, maybe, maybe not; opinions are split on this issue and vary from project to project. The point is that there cannot be conspicuous philanthropy without an element of misrecognition, or false consciousness, or whatever you want to call it; and in a time where inequalities within countries are growing rapidly (and I am sure people still remember the Oxfam numbers about global inequality [7]), everything that legitimises political inaction concerning that matter needs to be thoroughly vetted.

Bourdieu notes that all the symbolic violence inflicted upon the dominated by the dominant is only in the rarest cases the result of a conscious decision on behalf of the elites. At the same time it requires tacit acceptance by the dominated. Something which I find missing in Bourdieu’s analysis is however the power of consciousness, the ‘thinking slow’-part of Kahnemann’s thinking slow/thinking fast distinction, when people have the potential to actively rise above their stereotypes; when they become aware of their chains, to speak with Marx. The World Development Report of 2015 about behavioural economics actually mentions and agrees with Bourdieu’s concept when speaking about mental models. It however also mentions possibilities to circumvent this problem of symbolic violence which all too often feels rather deterministic in Bourdieu. [8]

Therefore, getting you, the reader, to think about what philanthropy nowadays is and what it does – to you, to society, to the donors themselves – is the point of this writ. If you are part of the problem, realising that very fact will often be a big step towards change. You can change your perception of yourself, agitate for structural change, all to your liking. Just don’t content yourself with what you have.

~Yannick Schwarz

Notes

[1] See for example Bishop and Green’s (2010, Chapter 2) part on Carnegie’s influences in their enthusiastic espousal of the philanthrocapitalist phenomenon.

[2] In a different context, economic elites might of course be of a very different ilk, as Carnegie and his peers are surely not universally representative of the affluent classes throughout time and space. A similar relation has however been discussed by Edwards (2008) in the context of today’s philanthrocapitalist movement. He comes to the conclusion that even in the contemporary US, efforts to strengthen civil society by such economic elites, business practices and the profit motive do not reinforce but rather impede each other.

[3] The evidence is not conclusive but this positive correlation between wealth and political engagement seems to continue until the very top of the income distribution (Page, Bartels and Seawright, 2013: Cook, Page and Moskowitz, 2014).

[4] This is a strong statement, but to me the evidence seems to be pretty clear on this issue (Gilens and Page, 2014; see also Page, Bartels and Seawright, 2013). While common sense might tell the same story for European countries, I have not seen systematical evidence for this. (Please comment if you know of some.) As European economic elites are traditionally more opaque about their lifestyle, this might be a more difficult task though.

[6] I notice myself constantly struggling with this as well. Just when I wrote this sentence, going through Bourdieu’s work in my head, I thought about the dualisms he finds to structure our language: bright-dull, quick-slow, high-low – and realised that I had written about ‘high circles’ without the apostrophes all along.

[7] There are problems with these numbers, but no matter what, they are astonishing and show a clear trend. Problems are the underestimation of hidden wealth, and their strange way of counting which overestimates their findings (the second link is for last year’s report but it still applies and is nicely written).

[8] I do not want to say that Bourdieu thought of symbolic structures as completely determining the human condition. To me, reading his work however does not make me optimistic about change; it does not give me the tools to overcome the internalisation of my social place beyond the “objective element of uncertainty [which] provides a basis for the plurality of visions of the world” (Bourdieu, 1989, p. 20).